OCELOT INDUSTRIES CASE

Ocelot Industries is a Canadian resource-based corporation who financial operating performance and financial market performance have been lackluster to poor in recent years. There is a belief at the Gordon Capital Corporation that the equity shares of Ocelot Industries are underpriced. A proposal has been made to split Ocelot Industries into two independent firms, one of which would retain the current firm's oil and gas business, while the second firm would retain the current firm's chemical business which is primarily involved in the production of methanol. This research assesses the prospects for the reorganization of Ocelot Industries as a means of enhancing the market value of the firms equity shares.

Ocelot Industries has attempted in the past to attract new capital through outside investment in the firm. The problem faced by the firm in this task is that outside investors are interested in investing only in those segments of Ocelot's operations that are current money makers. True to the short-term mentality of North American investors, no outside investors indicated any interest in Ocelot as a total company that would likely provide an acceptable return over the long-term. Consequently, a proposal has been made to split Ocelot into two firms. The hope is that the two separate firms will attract substantial outside where the firm in its current configuration was unsuccessful.

Category: Business - O